New Delhi: The Supreme Court (SC) Wednesday set aside the acquisition of around 7,000 acres of land by the Odisha government in Puri for a university to be set up by Vedanta Foundation, now called the Anil Agarwal Foundation.
Upholding an Orissa High Court order that had quashed the land acquisition in 2010, the court noted that the land belonged to 6,000 families, consisted of two rivers and abutted a wildlife sanctuary on Puri’s outskirts.
It also reprimanded the Odisha government for violating the “public trust doctrine” — which states that certain resources are preserved for public use and the government is required to maintain them for such use — to ostensibly favour the Anil Agarwal Foundation.
The SC bench of Justices M.R. Shah and Krishna Murari held that the acquisition was done with a “malafide” intent to show “undue favour” to the foundation and dismissed its appeal against the HC’s 16 November, 2010, judgment which had set aside the acquisition.
The Odisha government had initiated land acquisition proceedings for the university between 13 December, 2006, and 21 August, 2007.
The bench noted that the state had also acquired two rivers — Nuanai and Nala — which would adversely affect hundreds of local families in the area.
“It is not appreciable why the government offered such an undue favour in favour of one trust/company. Thus, the entire acquisition proceedings and the benefits which were proposed by the state government were vitiated by favouritism and violative of Article 14 (right to equality) of the Constitution of India (sic),” the bench said. It also imposed a penalty of Rs 5 lakh on the foundation.
The amount, the court directed, should be deposited with the SC Registrar within six weeks. Thereafter, the money shall be transferred to the Odisha State Legal Services Authority.
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SC’s reasoning behind order
The bench listed the reasons behind its conclusion that the Odisha government had extended “undue benefits” and “undue largesse” to the Vedanta Foundation.
It said the state had given total autonomy to the foundation and its authorities with regard to administration, admission, fee structure, curriculum and faculty selection at the university, according to the MoU signed between Vedanta Foundation and the Odisha government in July 2006 for setting up the university. The MoU has been recorded in the court.
It noted that the proposed university would have had complete immunity from any reservation laws of the state government.
Apart from extending assistance in getting regulatory approvals from the University Grants Commission, All India Council for Technical Education etc, the state also agreed to provide a four-lane road from capital Bhubaneswar to the proposed site, according to the MoU.
The agreement further stated that the foundation would be consulted before changes were made in land use or zoning plan within a 5-km radius of the university boundary, the bench observed.
Besides, a promise to exempt all state levies/taxes/duties namely, viz. value added tax, works contract tax, stamp duty and entry tax on R&D equipment, educational aids, lab equipment and tools, and construction materials from the date of signing of MoU was also made to the foundation.
In addition, the government promised to assist the foundation in obtaining a no-objection certificate for the project from the state pollution control board, all clearances from the central government as well as environmental clearances. It also assured extraordinarily huge amounts of electricity and water for the proposed university.
The court also noted that Vedanta Foundation was a private company at the time, and the Land Acquisition Act of 1894 bars land acquisition for a private company.
The SC thus concluded that the acquisition was vitiated by malafide “exercise of power by the state to acquire the lands and hand over to the foundation, which claimed to have converted itself into a public limited company, despite being a private company to acquire the lands in question”.
The Vedanta Foundation had in September 2006 changed its name to Anil Agarwal Foundation, and allegedly converted into a public company, obtaining a fresh Certificate of Incorporation from the Registrar of Companies under Section 23(1) of the Companies Act.
The court also came down heavily on the state for its non-application of mind on environmental aspects and passing of two rivers from the acquired lands in question.
“It is not in dispute that from the lands in question two rivers namely ‘Nuanai’ and ‘Nala’ are flowing, which as such were acquired by the state government. How can the maintenance of rivers etc. be handed over to the beneficiary company,” wondered the bench. This, it said, would be against the public trust doctrine.
The judgment also took note of the wildlife sanctuary which is near the acquired land.
It upheld the HC’s observation that large-scale construction for the establishment of the proposed university will adversely affect the sanctuary, the entire ecosystem and the ecological environment in the locality.
The proposed university’s distance from the sea, which is approximately 2,000 meters, was also flagged as an area of concern by the court.
“It is required to be noted that the lands were proposed to be acquired at the instance of one foundation/company and the state government was dealing with the lands belonging to the agricultural landowners. It is required to be noted that the government is holding a public trust and has to deal with the lands belonging to private landowners, more particularly, agricultural landowners in accordance with law,” the court said.
‘Malafide exercise’
Vedanta Resources Limited — with Vedanta Foundation as the philanthropic arm — had first applied to the Odisha government in 2006 to set up a university in the state on 15,000 acres of land.
The SC noted that a presentation was shown to the Chief Minister (Naveen Patnaik) of the proposal in April 2006 after a site for the university was selected on the outskirts of Puri.
The Odisha government then initiated acquisition proceedings for 6917.63 acres of land on the Puri-Konark marine drive by issuing notifications under the Land Acquisition Act, 1894, between 13 December, 2006, and 21 August, 2007.
However, after a batch of petitions were filed by aggrieved land owners, the Orissa HC quashed the acquisition notification and proceedings as being “illegal and a malafide exercise of power”.
This led the Anil Aggarwal Foundation to file an appeal in the apex court, in which it described the HC order as “erroneous”.
Rejecting the foundation’s argument, Justice Shah, who authored the SC judgment, observed Wednesday: “It is required to be noted that the lands in question acquired for the beneficiary foundation/company/trust were acquired for the proposed university in a prime location just adjacent to (a) wildlife sanctuary and from the lands in question acquired, two small rivers belonging to the state/acquired by the state are passing (by).”
Noting the manner in which the state government dealt with the acquisition process, which left 6,000 families landless, “without holding any proper enquiry into the need for the acquisition”, the SC opined that the HC rightly entertained the writ petitions, including PILs, of the aggrieved parties.
The acquisition, the SC held, can be set aside if the process is vitiated by not following the statutory provisions and not merely because some persons did not file the objections or accepted a meagre compensation or even accepted the compensation.
According to the SC, the entire initiation of land acquisition proceedings, including selection of land, was done by the company and not state.
The subsequent conversion from private company to public company was an attempt to get out of the statutory provisions under the Land Acquisition Act, 1894, the SC observed, noting that “this was done to overcome the state law department’s view that a private company cannot acquire land after proposal was given”.
The judgment referred to this conversion of the company as a “malafide exercise on its part”.
(Edited by Nida Fatima Siddiqui)
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